The CPTPP has been signed – no United States and “IP Lite”

Published on 08 Mar, 2018

The “CPTPP”, otherwise known as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership is what remains of the “TPPA-11” (which was itself, what remained of the Trans-Pacific Partnership (“TPP”) Free Trade Agreement following the withdrawal of the United States). Earlier today (8 March 2018), in Santiago, Chile, the eleven remaining signatories put pen to paper on the final text of the agreement, which even without the US, still accounts for about 14% of global GDP. The CPTPP isn’t missing only the US – the original TPP text has been stripped of several “polarising” clauses, the most notable of which relate to IP.

What happened to the TPP?

Following more than 25 rounds of negotiations spanning over a decade, the text of the TPP was finally agreed on 5 October 2015. Involving 12 countries and affecting up to 40% of the world’s population, the TPP stood to be the largest free trade agreement in history.

However, the TPP was never ratified. Rather, it suffered by way of unfortunate timing. During the 2016 United States Presidential election campaign, the Republican Party nominee Donald Trump vowed to withdraw the US from the TPP if elected; his position was that the agreement would undermine the US economy and its independence. True to his word, President Trump then formally withdrew the US from the TPP on 23 January 2017.

And then there were eleven: Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam. The so-called “TPPA-11” essentially then had four options: pull stumps on the entire agreement, start over, ratify the previous agreement (and proceed without the US), or to proceed largely on the basis of the agreed text sans certain clauses that may not have been included were it not for US insistence.

No United States and “IP lite”

At November’s APEC Summit in Da Nang, Vietnam, trade ministers of the TPPA-11 announced a commitment to forging ahead with the CPTPP, but to suspend a number of “polarising” provisions from the previously-agreed TPP text; many such provisions relate to IP.

As it happens, many of the now-suspended IP provisions were included only upon US insistence. With the US now out of the picture, there was no real barrier to suspending such provisions other than foregoing a “carrot” that may, in the future, have lured the US back into the TPP fold. That said, the provisions stand to be suspended, not deleted altogether – and as such, should the US wish to re-enter the TPP following a change in administration or direction, the framework remains. Interestingly, on 25 January 2018, President Trump refused to rule out rejoining the TPP fold, but emphasised that it would require a “substantially better deal” for the United States; the suspended IP provisions may serve as a starting point in any future negotiations.

Which patent-specific provisions have been suspended?

Patentable subject matter – Article 18.37.2 and 18.37.4 (second sentence): patents may be granted on new uses of known products or inventions derived from plants.

Patent term adjustment for unreasonable granting authority delays – Article 18.46: this was to apply to patents granted more than five years after filing or three years after examination.

Patent term adjustment for unreasonable curtailment – Article 18.48: this allowed for adjustment of the patent term due to delays incurred during marketing approval – for example, in respect of pharmaceuticals.

Protection of undisclosed test or other data – Articles 18.50 and 18.51: this provision facilitated data protection in respect of information on pharmaceuticals or biologics submitted as a requirement for marketing approval. At least a five year exclusive marketing period (for the same or similar products) was to be provided

What sort of numbers are we talking?

Some of the numbers applicable to the original TPP were rather eye-popping: about 40 percent of the world’s GDP with a combined GDP of US$28.5 trillion. Although the CPTPP represents a considerable scaling-back of these figures, the revised numbers still make for impressive reading: 494 million people, 14% of global GDP (US$10.2 trillion) and US$404 billion in inter-signatory trade (2015).

But what does this mean for Australian IPR holders, really?

In short, not much. As it happens, Australia’s IP laws were already largely TPP-compliant prior to the original agreement being made on 5 October 2015. There were two principal reasons for such compliance: firstly, the influence of the US upon negotiations toward the TPP; and secondly, the fact that Australia had only recently (May 2004) signed a bilateral free trade agreement with the US, at which time Australian IP laws were brought into line with the standard the US expects of its trading partners.

As such, a relaxing (or suspension) of certain standards with which Australian laws are already largely compliant is unlikely to have any discernible effect on the strength of IP rights granted in Australia. For Australians seeking IP protection abroad, however, the “patent bargain” may be a slightly different proposition.

Opening the gate to abolish Patent Term Extension in Australia?

Perhaps it’s more coincidence than conspiracy, but Australia’s Productivity Commission has previously recommended that Patent Term Extension (PTE) in Australia be abolished. Although the Government responded in the negative, it is perhaps worth considering how much of an influence the protracted TPP, TPPA-11 and then CPTPP negotiations had upon the Government’s stance. In theory, now, there is nothing to stop the Government abolishing PTE should it wish to do so (aside, of course, from the many and varied economic arguments in support of such a scheme).

Where to now?

Essentially, the CPTPP is now where the TPP was, circa October 2015: the provisions of the CPTPP now require at least six member states to ratify the agreement in order for it to have effect in such countries.

Watch this space, although not too intently. We estimate that January 2019 would be about the earliest the CPTPP could take effect.

Patent-wise, what does the CPTPP mean for Australia and New Zealand?

Increased trade, as would expectably occur under the CPTPP, brings with it increased incentives for foreign patent applicants to file in their destination markets such as Australia and New Zealand. In this respect, the eventual ratification of the CPTPP throughout as many of the eleven signatories as possible amounts to a substantial positive for the region.

Summary

All things considered – and purely in respect of IP, the CPTPP is arguably a good thing as far as Australia and New Zealand are concerned. To the extent that attracting foreign investment in our economies remains a primary goal of the AU/NZ Governments, anything that provides foreigners with an increased incentive to file within this region has to be viewed as a positive (so long as it is not necessary to cede too much ground in return). On the other hand, in the worst-case scenario where the CPTPP (like the TPP before it) is never ratified, we don’t necessarily lose anything – it’s simply a case of status quo.

Shelston IP has been following the TPP (and now CPTPP) negotiations for the best part of a decade. We will continue to keep readers apprised of developments as they relate to IP.

Industries

At Shelston IP, we recognise the imperative to develop and maintain a high level of knowledge about our clients’ businesses, and the industries in which they operate. We have accumulated deep experience in all of the ‘IP-reliant’ sectors, meaning those that are technical, knowledge-intensive and research-driven.
Many of our practitioners held positions of responsibility within corporate Australia and public institutions prior to qualifying as attorneys. Today, we strive hard to stay connected and informed through active involvement in a large number of industry associations and professional bodies. This includes participating in task forces, committees and specialist work groups which have been assembled to aid the progression of our sectors.